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tv   In the Loop With Betty Liu  Bloomberg  July 28, 2014 8:00am-10:01am EDT

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airline industry is dealing with the latest geopolitical fallout to pay its first dividend in almost 35 years. the business goes on in the airline industry. we will cover all of the latest and ceon a president robert reston. russia has fired across the border. supplying rep -- weapons to rebel forces in the ukraine. the former owner has one a landmark $50 billion award compensating -- confiscating their company. back here in the u.s., murder monday. a big takeover. a company agreed to tie -- to -- it will give dollar tree
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more than 13,000 stores in states and in canada. you could not buy it for a dollar. our chiefbring in markets correspondent, julie hyman, who has a lot more on the merger. >> what is fascinating about the deal is a dollar tree is smaller than other companies. icahn'stands at -- carl stake is around nine percent here trying to push for someone family dollar. maybe dollar general, a larger competitor. the ceo is going to be stepping down. factors that thesis and the question.
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it has got fewer stores. they are doing 1490, seven 450 per share. we have already seen family dollar come up to some extent in anticipation of some kind of deal happening. >> we know walmart has been in turmoil and they cater to the , the oneomer struggling a bit more in the economy. how are these companies doing? >> they are also struggling, particularly in the case of damage dollar. it had been under pressure to do it. dollar stores broadly have been taking share from walmart.
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beenme extent, it has going in and out quickly. even if they're paying a little bit more in some cases. in the case of family dollar, if you look at the low income customer, they have been suffering. >> very little wage growth. >> exactly. that is also one of the reasons the dollar stores are also facing some of the same issues. >> thank you so much. in washington, the state satellite release photos. russia denies the charge and it marks another escalation in the crisis. peter cook has more on this. what can you tell us? what do you know about this.
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there were a lot of questions about, can you prove it? here is something allegedly showing firing into ukraine. what the u.s. government has done now is emily presented russiant claims shows firing into the ukrainian side of the border. it shows burn marks on the russian side of the border and then impact craters on the ukrainian side of the border near the ukrainian military unit. the united states claims these photos clearly demonstrate russians have been firing across the border onto the ukraine side of the border. addition, another escalation
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here. what the u.s. claims is clear of the larger firing intof ukraine. russians deny this. a suggestion this morning that the photos are fake. clearly denied this but how will the u.s. respond? the question. this is an excavation and it is troubling to them. over the weekend, ben of the obama administration talking about this and the threat of more sanctions in the united states and the potential the united states might be willing to provide military support? >> we have not ruled anything out. we provide intelligence. we think the best thing the united states can do is send a message to russia -- to russia
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through very large sanctions. you will see the european moves out -- the europeans move out on stronger sanctions. >> we're waiting to see what europeans do, talking about stepping up their sanctions beyond what they did last week and perhaps the possibility the estates is moving simultaneously or after that with additional sanctions aimed at russia as well. saw --k you, and we just on the rise since the downing of that malaysian flight to does lisa go. organize to recover the remnants and investigate the crash site. brian is in london with more. the international police team thetasked with recovering remains of the crash and they have abandoned their mission with heavy fighting. what is going on? >> that is right. this is the second day in a row they have not been able to access the site here it today
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was pleased by both the netherlands and australia that were attempting to get to the site. most of the bodies collected initially had been repatriated. they still remain at the crash site. this is the effort to get back there. two days now they have felt. that does not bode well for the russians when it comes to sanctions. >> as we were just discussing -- discussing with peter cook, how close is the eu to issuing more sanctions question mark >> i think they're getting very close. one of the reasons they put up a satellite images they put out yesterday was to nudge the europeans along. that policee news teams cannot get to the site. these are two things the european union will not look favorably on. we heard today that they would deftly like to see sanctions tomorrow. the german chancellor is on holiday but said she will
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personally go to brussels. interrupt her vacation, to get the sanctions if she has to. they are really pretty set on doing at least something tomorrow. >> looks like momentum is behind them. the sanctions themselves, what will they entail? >> two things, one is the blacklist, likely like the u.s.'s blacklist. cronies list, targeting friends russianly of the president, not just people seen as destabilizing the situation in the ukraine itself, but people seen as holding sway over the russian president. that is one thing they will look the second thing is the range of economic sanctions, the biggest thing is disallowing russian companies from accessing european capital markets, just like the united states has already done with a handful of russian companies. it would be the eu saying to russian banks backed by the state majority-owned by the
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state that they cannot do any more listings or raise any more money in bond issuance in the european union's. that is what we're looking for. >> thank you, ryan in london. the airline industry is dealing with the aftermath of the malaysian airlines and ukraine. to suspend flights to israel that have since been restored. it all comes as malaysian airlines may rebranded health in the lake of these two air disasters this year. with more, i want to bring in the retired chairman and ceo of american airlines. he joins us now via skype. first, what will be first going on in the boardrooms of all commercial airlines today given the stated disasters we have seen not just in the ukraine but around the world in the last avril week? >> obviously, they are sources of conversation.
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the industry will know, as i am sure you do, that the aviation industry has been get -- been getting consistently safer for many years. 2013 was a good year. 2014, we had two or three of these events, sprained by any standard. my guest is beef -- my guess is before 2013, we have another year. strange -- they fact is commercial radiation remains and it is very safe. >> you are absolutely right. i looked at some of the numbers before our interview. airline safety has only continued to go up in the last several years. it is certainly one of the safest ways to get anywhere these days. i wonder if, for airlines, insurance premiums will go up given the disasters we have seen
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over the last several weeks. it is this sentiment that this news is causing a lot more anxiety. we will see for airlines a little bit of a hit to their bottom lines? it.ou will not notice the fact of the matter is insurance premiums will go up a you and i, but as already agree, 2013 was a very safe year. there may be some response to individual error, but overall, insurance premiums are not going to change. >> should airlines redraw their flight path, the ones that go over certain political hotspots? part of whatis is the worldwide society has got to decide.
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do we want to have faith commercial? if so, everybody is going to have to behave in a more responsible way than the rebel units in the ukraine with very dangerous weapons. airlines will, take more active steps to avoid areas in which there is actual conflict. industryt the airline and the industries of the world have got to avoid all the areas of conflict, and it will obviously impose costs and inconvenience on the public, a little inconvenience certainly is an appropriate price to pay and that is what we have to do. >> clearly, you have had some that airlines say they are not going to fly over iraq anymore given the situation there. for flight paths and
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destinations, you have to now count in war and -- in terms of where you're going. >> of course you do. of the worldomatic we now live in. we are not talking about states anymore. only nationstates that have these kinds of weapons. we have these sorts of individual interest groups that can get their hands on dangerous weapons. sure. i think the airlines will make more strenuous efforts to avoid any area where these weapons might be used here responsibly. as i said, that will impose incremental costs and inconveniences. >> just stay with me for a moment. we will be back with you. up, better not have a craving for a big mac in china.
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i meet isll you temporarily off the menu there. plus, we will have a real check. our players going national with the new york state start up. we will be back. ♪
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>> you are watching "in the loop" live on bloomberg tells bloomberg- television. announcing a public offering to finance growth despite a first-quarter net loss of 22 main dollars. a virgin america ipo. i want to bring back the former american airlines chairman and ceo bob. what do you make of this ipo? >> i assume, they look at the airline industry and they figure they will approve their own results and this is the time to give the public an opportunity to participate.
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what virgin america thinks will be a time of prosperity. >> it sounds that way. you know american airlines is returning cash back to shareholders and others are as well. sense ofehind this renewed profitability here? >> consolidation and elimination of competition. it works like a charm. itthat is terrible very sounds like that could come at the expense of consumers. >> of course. come on. is a good thing. the airline industry destroyed a lot of capital over a lot of years. phd who washe running during the deregulation of the airline in 1970 8, 20
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years after, he came along and said, you know, deregulation does not work very well in an industry like the airline it destroyed a lot of capital, and to destroy the ability of u.s. carriers to compete with airlines around the world. now we have consolidated your 80 yes, there is a lot less competition than there was. the fact is, the industry is not destroying capital. it is earning a return on capital. that will create a stronger industry and, i think, in the long run, it is good for the country and good for consumers. immediately, our consumers paying a little the more? yes. >> but bob, one of the things for consumers that has been transforming his all of the fees
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that have been piling on? will that stop or slow down? >> i do not think so. i think it is pretty much established the level it will be at. i do not think ulysses a lot of incremental additional fees being added. the industry has created a version of its product and that is probably appropriate. the fact of the matter is, it cost a lot of money to move baggage around airports. customer who does not check bags have to stay? that is effectively what they have done. by charging for baggage. they let the people who use the system pay for it. >> thank you so much. great to see you this morning. the former american airlines ceo.
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former republican vice presidential candidate sailor -- on the roadis going again by launching her own online television channel. channelsubscribe to her for $10 per month or $100 per year. she says is a way for her to cut through what she calls the media's politically correct filter. it is all part of the tap network. coming up, the new york times calls on congress to act. the paper says it is time to legalize marijuana. plus, joe takes his place among but had all-time greats to issue right after the ceremony and we will tell you why in a moment. ♪
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>> good morning. here's a look at our bloomberg top headlines. the average american family is poorer than it was 10 years ago thanks to the great recession. they average household is worth less than it was decades ago according to a new study. mixed -- mcdonald has pulled its bid mac and all burgers on the menu. in china. allsupplier recalled products made at a shanghai unit
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yesterday. the packaging company was caught relay bring -- relabeling old meet as fresh meat. and they admit they hired a oftar shell in the four yard a u.s. school. they say they were not responsible for the deaths of 16 children at a school. footage shows the yard was empty at the time of the attack. it is 26 minutes past the hour. bloomberg television is on the markets. olivia sterns has much more as we are about an hour away from the open on this monday. >> iq. in focuse for futures right now. we are today focusing on aluminum. futures began trading and metal in may. scott,e, ken hoffman and a.c.l. itg am investments. at t g.m. investments.
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it looks like the market has now actually seen a deficit area >> aluminum has an really interesting this year. a change from a big surplus to a destin -- to a deficit. a lot of producers have cut supply. side, you have the ford f1 50 that will take around 250-300,000 metric tons, which fits and about one month. >> tell us a little bit about why the cme decided to trade the futures contract and any specifics about the contract itself. >> certainly. the contract is interesting. and i buy aluminum actually want to take delivery, there are two parts of the charge. the parts that pay for aluminum, about $.88 per pound.
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to actually get that aluminum out of the warehouse and onto my truck, i have to pay a premium, a surcharge. the premium has said, this is not fair and what they're doing is they put the $.88 together with their charge, $.16, saving yourself about four cents per pound, and they have a new contract around this. they hope the buyers of aluminum will switch over to the contract. if they do, traders will go where there is liquidity and the contract will be a home run. it could be a really good time for them to come out with this contract. the newyou think of contract and do you want to trade it and where are you placing bets on aluminum? yes, we are really excited about it down here. we can make some headway. i agree with earlier comments that this is a perfect time to get involved. when we started trading year, it
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is starting to show weakness but if you are in terms of the july stayact, i want to alongside here with a tight stop around the 2350 area. it is a product a lot of customers have shown demand for. credit risk. all of those things are even more important today's marketplace. >> let's put the trade in layman's terms. if you buy aluminum futures and the prices up $10 and the total contract is up to hundred $50 in 25 metric tons, ken, i want to go back to you. we often hear the word remy moment talk about futures. headlines recently have been that the premium for physical delivery is at record level highs. premium when what it comes to alumina means. >> sure. it has been around a long time. it is really getting the metal you own out of the warehouse with a shipping and handling charge. for decades, no one cared.
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for aluminum, a petty to account, it never mattered. most of the warehouses were not making money. u.s., you have one warehouse left. they all the sudden started raising the premium legalizing -- realizing it is a huge part of the cost of aluminum. that is why you saw the cme jump on this. hopefully drive the premium down for consumers. >> interesting. a new loan of futures contract trading at what might be a pivotal point for the price of the metal as it looks like the supply is finally running out of market. thank you so much for joining us. back to you, betty. the markets,bout we're getting breaking news right now. charging lloyds banking group and lloyds bank with manipulation. manipulation in their letter --
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leveraging fines. she -- peter cook has much more. >> this goes back to the libor controversy over the last couple of years. banks accused of rigging the libor, the interest rate setting process. bankregard to the london offered rate. now lloyds banking group is settling with government regulators. the amount, $105 million according to the afp c. me in thet clear to initial headlines is how much the total might be. there are also u.k. regulators involved in there might be a separate site -- separate settlement with them. the u.s. dollar amount, $105 million. lloyds banking the biggest mortgage lender in the u.k. and tos is again the latest bank resolve some of these issues. your call barclays from a few years ago also solving these issues.
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this is the libor controversy coming home to roost again if you will. there are others out there but lloyds banking group, the word is $105 million settlement. we will have more details as we dig it for into the settlement announcement. let you dig more into the story for a moment. in the meantime, i want to get to olivia sterns, who has more on another piece of breaking news. we knew about this last week. it is confirmed zillow is buying truliaa death truly a -- 43.5 billion dollars. >> another merger here on monday morning. this will create by far the largest player in online real estate. the price is a 25% premium for zillow's current ceo will stay on.
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are lookings people for houses more and more online and are seeing it you to mount of companies trying to advertise online. the business model for the two companies are very similar. a lot of synergies. an analyst says these two have virtually identical models and paved the way for the two to become very profitable very quickly. they make money by having real estate agents pay to have their contact information on my next to the listings. so is a little older. growth is a little the slower there, but they have both seen growth above 40% on a year on year basis. agreeing to buy truly afford 43 $.5 billion in an all stocks we'll, creating by far the largest online real estate advertising company. back to you. >> thank you. we will stay on the news. a competitor expanding across the country as well.
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we will hear from the ceo about how he is changing the way you buy a home and have -- what the merger means for his business. how the company is trying to win back customers after the privacy breach earlier this year. ♪
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>> more on that breaking news this morning. the largest online real estate stay -- site. in another round of financing to branch off from new york city to other cities across the u.s.. it also just hired leonard crudeerg, his listings in -- include this beauty, a condo in manhattan. goldman sachs, the american express ceo, and
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ceo. with me now is the founder and ceo robert. great to see you this morning. you have got big backers here, including your former employer, goldman sachs. what is this merger? have got to does big guys getting even bigger. what does that mean? race to is an arms bring technology into the real estate space. real estate is one of the last major segments of the economy without a lot of technology. as much being driven by customers as by investors. , one is a trade out there of the largest traditional brokerages. as a result, their stock price has gone up over 90% year to price hashe stock gone down almost 30%. >> you're saying that is really what is driving all of this. >> that is my belief. every year that goes by, there will be more
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and more value added from technology companies while traditional brokerages will provide more or less the same as they did before. >> customers are in demand but you're saying customers are not really to many this kind of technology. >> customers are demanding but the push europe over the last year is from investors. >> what is it about technology that will change the industry? built bychnology was my cofounder who sold the company at google and other companies at twitter and then who built the fastest computer in the world. the kind of tools we are building for include a mobile app that has won for an and one for a customer that speak continuously to each other and that really creates -- >> you have got real-time data? cop thission of urban is a real estate platform that powers a brokerage. we are building a data research
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arm, all of the information that comes from our site and others and provides real insights that form decisions. in the long term, we want to go beyond the transaction to connect people to the neighborhood and their cities. >> this is what i think people are using these websites for. tell me how urban compass will answer these issues. they go on truly a were zillow because they want to know how much their places worth. they're looking for places, but they can find places. they're looking for is, how do i get all of these that i keep getting, the commission, six percent or eight percent, how do i take care of that? how does technology answer that? the investors may get wrong is that agents are not door openers. it is a sophisticated transaction. it is the most important decision most people make in their lives. someone has to open the door and
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take a picture. there is a difference between a good and great picture. someone has to advise on the contract. someone has to negotiate. i do not believe knowledge will replace agents. then truly it differ oh? -- trulia? agents, greatring agents with our innovative technology to help customers and create a partnership. way? what >> our listings of the most accurate database in new york city, one, and two, a mobile app for agents that give them in the palm of their hands -- when a customer want to see an apartment, they click to see the apartment and he goes to the most relevant agent with the most relevant experience with the highest customer satisfaction scores that are available right now to show the apartment. we're proud of that, to work
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with agents asked for them. >> what did you learn from banking on wall street that you're using for the real estate is it? -- industry? of advising on buying and selling a company is very similar to advising and selling a property. the same structure of the presentation, the pitch deck, of selling profits, selling timeline, there are a lot of similarities there we are bringing to the states. >> thank you. the founder and ceo of urban. we will be back in a few moments with more on that fine and the .harges levied we will be back. ♪
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>> regulators [indiscernible] guy johnsoning in from london with more. on the european side. we are to know what was said about manipulation. what about european regulators? >> it is part of the settlement, betty. it breaks down between the three , 105 million. one hundred $79 million is going to the regulator over here. million is going to the u.k. regulator. clear over made very the last few days by regulators. the more egregious cases involved in libor have already passed. this is not one of the more egregious cases. he made that very clear. lloyd is saying today it
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received full cooperation, which is interesting as well. it is saying some individuals have been suspended and it will not work for the implications on pay. but this is kind of the middle range of what we are expected. get is a huge volume over the next few days. we will be picking through those to find out more interesting aspects on this case. u.k.ttles with both the and the u.s. regulators. back to you. >> we will keep monitoring the fallout from the settlement. thank you so much. the pulse editor in london. it is time for our weekly look at linkedin's top trending headlines. john, it is interesting. these stories today are all about the workplace. what you do in terms of trying to get hired, when you want to
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leave. exactly. let's start with the one story of how you tell your bosses you want to leave, to do it right -- the right way? >> this is for the employee and the employer. dash out theut to door, it is an opportunity not to ruin it. not micromanage you and you should not load. i can relate to this very well. myre were a lot of things employer did not know, that it should have known. to --s the way you want translate the business. just because you want to position your self so you're not
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burning bridges. you never know who you are working for in five years. over 50 is another story. >> this only affects half the people on bloomberg tv at this --ent, but it does really to the-- it relates current trend of people changing jobs very quickly. they are encouraged to and it is a reality. counting -- it is very foolish if you're not counting those who are over 50 were experienced. >> one of the great names in recruiting, i know his posts are always very popular on linkedin. responded to a job
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posting is a waste of time. readad.resumes are not a recruiter will look at one for maybe 10 seconds. if it is not a perfect match, out it goes. recruiters find people for jobs. they do not find jobs for people. it is fine if you are a perfect match and you want to make a run for it and say, i am the only one for this position, that is great. the real skill is positioning yourself in the marketplace. right things in the shop window, your resume should be searchable by google and it should be up to date and current care that is what will get you your next job. >> thank you so much. a reminder to check out my linkedin page. ceong up, the blackberry addresses speculation he is entertaining offers to sell the
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company. we will discuss how the japanese automaker is adjusting his plan for a car. we will be back. ♪
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call joe torre during ceremonies -- q1 clutch oh world series while managing the yankees from 1990 to 2007. earlier this month, i asked him to be considered one of the greats. >> eiji jim about a once in a while, but you do it you do and comes,e when the time someone recognizes what they the hall of fame. it is hard for me to conceive of trying to put into words based on the fact when i start talking about the hall of fame, i think about all the players i played against and played with at our
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were ahat i always felt level above everybody else. it is humbling. trust me. for 28 minutes at the hall of fame ceremony. one. -- the one person he failed to thank was the man who had -- who hired the yankees. he feels terrible about that, saying he missed thanking the most -- the obvious guy in the world. the new york times calls for an end to the federal government ban of legalized marijuana. this is the new york times, which says washington should leave the question of .egalization to the states inflicting great harm onto society just to prohibit a substance far less harmful than alcohol. government,federal
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which still treats marijuana as illegal. they have legalize recreational use of marijuana. federal authorities have allowed both states to proceed with that & calls that arrangement on acceptable. battle goes on. it is 56 minutes past the hour. bloomberg television is on the markets. a lot is happening. had dollar tree and dollar general, that merger along with truly a and zillow just announcing a merger. on the markets again in 30 minutes. coming out, lloyd bank is charged with manipulation in a situation of bank described as a gross breach of trust. america announces a plan to file an ipo. a loss.
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what does this say about the state of the airline industry? ♪
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>> stocks will open lower on this sunday. investors getting sales in about the openingafter bell. dollar tree agreed to by family dollar, a takeover that provides a network of over 13,000 stores. the airline partly owned by richard branson has filed for an ipo. virgin america has been in business for just seven years and off it goes to be public. for more, i want to bring in adam johnson. why now?
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>> times are very good for the airlines. the man who runs united told me for the first time in decades, they are being run like a business. ,f you look at a weird stat they multiply all those three together. if you look at what has been happening, a growth of five to seven percent very consistently. you airlines now making money. , americanrowth airlines is 110% coming out of bankruptcy. these guys are making money. >> they are. bob withalking with american airlines. >> he does is go, we were talking staycation. money.lines are making they are capitalizing the ipo, seven years in the making.
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it could definitely be larger. it is a small airline. there is a curious law in the books that says a non-us entity cannot own more than one percent of airlines. entity,re is another virgin america investments, which includes very interesting people. we do not necessarily know these guys are still in investors of that conglomerate. the former head of the department of transportation, and a trust manager, the ceo at virgin atlantic. >> adam, thank you so much. lloyd banking group agreed to pay $370 million for
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manipulating the benchmark interest rate. we have coverage from both sides of the atlantic on the settlement. guy johnson join me and also from with us first off, this all stems from the year-long libor investigation. >> that is right. tois just the latest bank settle with regulators in the u.k. of libor, specifically accuse of regulating, trying to its false reporting of libor rates and its manipulation of libor. banks thate of the would submit it's great for libor. the allegation is these banks submitted false numbers to affect the outcome of the libor rate and to do that to benefit
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cash and trading. it says in its statements that at times, the subsidiaries were successful and it points to is a civic instances. let me read you from one of these to show exactly what the allegation is here. a quick question, do you want us to keep the libor higher? , yes, as low as possible, please. as high as you can in the threes. ok. got it. total settlement was 370 million dollars. >> stay with me. earlier, this is
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not one of the biggest settlements by u.k. regulators. >> saying the other day the high point in terms of the most egregious cases, this is not one of them. but the language we are hearing highlyrning, reprehensible and clearly unlawful. regulators here, clearly unhappy with the way that lloyds has acted here nevertheless, making it clear the high point has passed and some of the language listeningely worth to. it will be interesting to hear how this is fully settled. >> it sounds like we are winding
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down to smaller cases. him --to bring in bart, a former commissioner. >> it is another one of these continuing things that seem to draw out for years. a lot of these cases go back to 2006 and 2009. a couple of things in 2011. they are a huge deal. libor rates impact hundreds of trillions of dollars in credit that people pay. everything from a home loan to a car loan. it is a big deal and overall, government regulators have done afterly good job of going this stuff. there are people out there who will sacrifice long-term values
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and that is just a shame. >> regulators have collected $9 billion in fines based on the investigation into libor manipulation. the fines and what has been levied against the banks and the >> i hope so. i think these are significant. a couple hundred million dollars may not seem like it is the the all and all. it is serious and significant. at $1.87 billion. but we are talking about billions of dollars in aggregate for these things. i think it will make folks step back. it would not surprise me if we tonot see more with regard
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libor. past theeported in the exchange commission had been looking at attempted manipulation. sends a strong message not to do any dirty deeds, it does not mean that this is the end of it. are alleged manipulation. and 2000 eight and earlier, what about the current state of play? how much confidence should investors have that this sort of thing is not happening? than it a lot better was. a libor interest rate, in one case, by the way, in the current circumstance, they succeeded in manipulating the rate.
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i think transparency is good for markets. whether or not they have to do with some of the metal prod us, transparent and until that happens, there will be doubt as to the veracity of these benchmarks levels. us.hank you for joining guy johnson joining us as well. nissan reporting strong second-quarter earnings. we have a look at what is down the road from the automaker in electric cars. we will be back. ♪
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>> nissan has recently backed with from statements about self driving vehicles.
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doubling down on spending the electric cars like nissan leaf. it raises questions about traditional automakers to keep up with technology. i want to bring in my bloomberg .ews and tribune are you wrote a column recently talking about nissan and how you believe the ceo is backing away from a big push into driverless vehicles why is that? is not keepinghe google ise rapid pace trying to set. traditional automakers, nissan has been the one to try the hardest to push the envelope technologically speaking. the best evidence we have seen is the electric car, the nissan leaf. no other automaker made the
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investment globally as nissan did. it also shows there is a penalty of leadership where investing in the new technology can get a lot of accolades, but a lot of times, the realities of that are not shaken out and we can see that with the nissan leaf. >> i have driven it and i am sure you and jeff have, it is not that great of an electric car. >> it is not terrible. it is a first-generation generation. the first generation of any new technology will be problematic. that is the problem. consumers are realizing new technologies, electric vehicles or autonomous vehicles are starting to become viable and they're starting to have more of an expectation of it. it is not clear the automakers can really get into the new technologies and make them commercially viable in the short
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term. there is an interesting trade-off between short-term reality and long-term goals the technologies are putting up there. twice you chime in. misconceptions about what he has been saying, he more explained in detail the rollout of autonomous cars. you need charging stations for electric cars. you can make all the electric cars you want. you need the info structure. autonomous cars, multiply that by 10. you need to have the other cars on the road he visible to the autonomous car. can have an autonomous car but it will not see anything else on the road. it is a slow walk. advances have been amazing so far. >> explain that to me. what is the biggest hurdle? >> the car itself can have radar that can see the car in front or behind it or a car or two in any
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direction, but you need the traffic lights to talk to the car. you need a car to know how many cars are coming up to the intersection. need to know what is happening in the intersection. imagine trying to take your hands off the wheel and go through an intersection right now. all the pieces on and off the road need to talk to each other. took elons sense, it musk. a google tos take get an auto industry going when it comes to driverless cars. >> when you look at some of their stuff in detail, they're saying, there'll in all the weird stuff that happens in traffic, and we are not quite there yet. the first time a child or a dog gets run over by the autonomous cars, look what happened when
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uber car gets into an accident. all these things are outgrowths to the technology and can create a backlash. >> thank you for joining us. we will be back in two minutes. ♪
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>> moving and shaking this hour, the blackberry ceo is trying to turn around the struggling smartphone maker that was once the industry leader. everybody had a blackberry. expect blackberry to turn a profit at the end of the year,
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next march. >> are you going to sell blackberry? >> i would prefer to go a lot of values before i contemplate that. ?> as ceo cleanse absolutely. it is only fair not only to shareholders but to employees. >> there has been a lot of speculation about the offers that have come across your desk. have any offers. people like to talk. talk is not an offer. a chineseou sell to company? -- one of our biggest
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days is in the government. ofhink there will be a lot regulatory issues and concerns and i appreciate that. >> what do you give your own chances for success? >> if you're talking about being able to create value, i think i .an do that >> 100% question mark >> everybody likes to do that. i would say better than 8020. i am comfortable where the company is with how we managed margin, thegy, the distribution channel, all of products coming out, communicating a secure manner over time. runway.there is enough stay backllow us to
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and invest money. i am comfortable with generating more value. whether it will be good enough isbe iconic again, that something i need to chew on. i do not know the answer to that question. >> the opening bell is next. ♪
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>> welcome back. i am betty liu. it is 26 minutes past the hour. bloomberg television is on the markets. here is the latest check on future stripper for the open. you have futures slightly higher. see earnings come out. today, it has really been a day of mergers. family and dollar tree merging four $9 billion. ago, this a half hour merger mania continues in the u.s.. we are on the markets again in 30 minutes. let's count down to the open with the top 10. is the only stories you need to know today.
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julie hyman joins in. shares are falling in the free market. the sector performs and outperforms on valuation and expressed concern the company's operating margins in 2015, the stock is fairly valued at $26. >> number nine, the stock was raised to outperform or market perform center bernstein. $30 a share. the stock sold off last weekend after the company reported strong second-quarter earnings but offered weak guidance for the current quarter. >> number eight, tyson foods, selling its poultry business in mesko and brazil for $75 million it in cash. they also reported third-quarter earnings that missed analyst estimates. >> number seven, shares of the chinese internet portal falling
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in the free market. -- premarket. sales mid -- missed analyst estimates. its weakest performing unit was online gaming. revenue fell by nine percent. number six, the drugmaker was to outperform abm oh capital markets. the company's not enough to make up for weakening mature franchises next year. the analyst 12 -- price market is $31. >> number five, shares of the discount shoe retailer falling in the market. under performed to neutral. the firm says it believes they will continue to lower their , $23 per share. >> we know bf w. >> it occurs to me, i am not sure the last time i have been there.
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what do you think they serve. chicken. 60%, 7.1 more than million shares apiece. >> that is not appetizing. >> number three, reynolds american. the tobacco company was a 12 month target of $72 per share. this comes a week after a jury $13red the company to pay a billion fine and increased competition of a merger. that headline should have said reynolds had just spent about $24 billion buying up a competitor. >> let's keep talking mergers. the real estate industry, julio.
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$3.5 billion, an all stock deal. the merger will create the largest online advertising company. >> that is a big deal in the housing industry. another big deal in the dollar industry. the dollar retail business. dollar tree has agreed to buy family dollar for about eight one $5 billion -- $8.5 billion. enlarged discount chain will have about $18 billion in sales. as markets kickoff trading, i want to bring in jim faraday. boom that wemerger have been seeing is exactly why you are worried. >> when we think about where the markets have been the last five
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years, it has all been about market expansion. now companies have to figure out how they are going to go revenues. it is hard to do. you see the merger activity to cover up revenue growth. the best strategy is to find great revenue growth. >> would you typify the two mergers we have seen today in that category? >> without a doubt to read getting scale to grow earnings without growing the top line. >> speaking of which, did a screen of the s&p 500 to see which of them are going to have at least 10% revenue growth. it is about a quarter. it is not many. these are the top. we have gilead, micron. it is a diverse group in terms of industries. when you are looking for the companies with sales growth, what is your threshold, if you will? more than 10%? growthant to see revenue
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at about 10 percent overall. the s&p 500 looks like it is going to be 5% overall revenue growth. we want the strong revenue growers. >> the stocks are in very different sectors. are there any sectors that you are looking at? growth at gilead is different than sales book at facebook -- growth that facebook. very concentrated portfolios. only 15-20 holdings. that said, we want ever suffocation. it is picking up the jams. the gems. it is seeing company by company at the headquarters. is there enough revenue growth from this business? can this business really accomplish what we think they can over 4-5 years? >> you think a lot of the m&a action is defensive.
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inversion,ot of tax that a lot of other people think is defensive as well. jack lew had an op-ed writing about this. he has written to congress, he wants to see a retroactive tax inversion law. he wrote that while the is this tax process moves forward, the pace of inversions is moving at breakneck speeds. we must attack this problem now. for you as an investor, how do you approach this kind of situation? i do you strategize to profit? -- how do you strategize to profit? paid byf taxes get consumers and individuals. only 20% as corporate. the rhetoric is bigger than the problem. the issue is fixing corporate taxes in the u.s.. it is not closing the loopholes, it is fixing the underlying process. >> do you punish or applaud a company that says, whatever with
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the tax reform, i'm going to try to get as much efficiency out of my own operations? >> we have been fortunate that we have had a couple of portfolio companies involved in deals. we have benefited from it. >> so you'll applaud it. >> i don't have a political of you one way or the other -- of you one way or the other -- view one way or the other. abbvie has agreed to buy shyer. jack lew was talking about the retroactive law. >> we are not into merger arbs . greatt to find fundamental companies. the u.s. has not done them many things on a retroactive basis. i think this is more of a warning or a stick. >> saying, don't do this going forward. is another company like.
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we wanted to get your thoughts on why you like mastercard. a lot of headwind for the industry overall. what elected over visa? particularly in the long term when you look at all of the digital disruptive startup payment companies coming online that are going to compete with the old-line companies. >> the majority of technologies we have looked at still use the existing system. mastercard and visa are entrenched. >> there will be the eye wallet out.allet coming >> will you let them go straight to your bank account or do you want an intermediary? i one intermediary. most transactions or paypal are funded with credit cards. >> that is very true. you do know you have a backstop when you use mastercard, visa, or american express. great to see you. jim tierney. lyft gets the green
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light in the big apple. more on that. scarlett johansson's new movie is a winner at the box office, taking in over $40 million in its opening weekend. i don't know if anyone got a chance to see it. "lucy." no fancier? >> terrible. [laughter] ♪
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>> here is a look at the top tech stories on our "bloomberg west" radar. access.ram offers web they are looking to the web to accelerate growth of the cable network, seeking to show investors that time warner is worth more on its own then paired with rupert murdoch.
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got the green light on thursday. it will be allowed to operate in all five boroughs of new york city. it will have a full rollout in the coming weeks. scarlett johansson's "lucy" one of box office battle of new releases over the weekend. the film from universal pictures pulled in $44 million to lead u.s. and canadian ticket sales. catch all the latest in tech and media at 1:00 :00 and 6:00 on "bloomberg west." has had a few speed bumps over the past few months. a warning that third-quarter earnings may be lower than expected. though itis stumbled, is up sharply over the last month. with me to talk more but where
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the next big opportunities are is the president of the ebay marketplaces. >> good morning. >> first off, the security breaches. you asked millions of customers to change passwords after you noticed this breach. as everybody change the password? >> not all, but the majority have. we are through most of it. most of the customers that buy and sell on ebay a lot have gone through the flow. behind.few months it is increasingly in the rearview mirror. we take action without was necessary to protect our customers. for 150g passwords million people is not an easy thing to do for an e-commerce business. it was the thing we thought would be in the best interest of our brand and our customers. >> where the some people you lost permanently because of this? seen any evidence
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that we have lost a substantial among the people. we have not seen any evidence that the data has been used maliciously. that is the good news. anytime you get 150 million people to turn over their password, you are going to disrupt your business in the short run. consciouslyy knowing it would impact our quarter, but we are happy it is increasingly in the rearview mirror. >> how do you make sure you completely regain the trust of your customers? >> i think just getting it right going forward. great product experience. having the overwhelming majority of transactions go well, which they have for decades. to me it is just constantly getting it right for buyers and sellers in our marketplace. we're still going to sell over $80 billion worth of goods this year. it is an enormous marketplace. ourmajority, almost all of customers, know the multiple layers of protection that we have. it was an unfortunate incident.
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we see customers coming back. i believe they trust us. >> do you know why the data has not been used maliciously at? -- yet> ? a resetting the passwords was safe, but not necessary maneuver. passwords for encrypted. we don't know if they were unencrypted. good news that we have not seen the level of fraud increase on our marketplace. >> another challenge you increased earlier this year. google changed algorithms so that they were diverting or funneling fewer traffic or less traffic to your website. did you anticipate that this was going to happen? >> we don't anticipated because google controls their search algorithm, like ebay controls around. it is our job to adapt to the changes that google makes. we are doing that. google makes changes in the way their algorithm is calculated periodically and our job is to change the way we do our
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particular marketing to adapt to that. we are in the market of doing that now -- process of doing that now. we have a great, collaborative relationship with google and we are working to bring some of that traffic back. >> how would you do that? how do you try to offset that? >> google's algorithm is the run and it works on a bunch of different factors. we have teams deep in our product organization at work closely with them to make changes to the type of things that people see if they search for an item, like luxury watch. we want them to come to ebay because we have the best selection of luxury watches in the world. how that page might look, however i links, where it might be ranked, that is all sort of deep in the mystery and magic of the ebay and the google algorithms. we are working with them on that right now. >> here in the next few weeks, we're going to be watching very closely the alibaba ipo and what the company does with the money they raise and how they are going to expand here in the u.s.. what about ebay overseas? >> we are a global company.
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we have the largest chinese export business in the world. alibaba has the largest domestic chinese business in the world. they are a great business. their numbers, from what we've all seen, are stunning. i suspect that the next couple of years ago want to be a story of the big e-commerce companies further globalizing. for us, our priorities have been russia, latin america, all of the emerging markets are growing very rapidly. >> even russia given all of this contention? >> continues to be. domestic china will certainly be in our focus over the next few years. while alibaba undoubtedly moves out from china around the world, we will hopefully be moving from the united states and western europe into china and other markets. it will be very interesting to watch. >> thank you so much for joining us. the president of ebay global marketplaces. coming up, one of the heavyweights of the media
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industry speaks out on the war between israel and hamas. ♪
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>> time for the global outlook. italy is celebrating its first tour de france victory in 16 years. -- nibalished finished the race minutes ahead of the second-place finisher. there is proof that russia is helping russian forces in the ukraine. theia has fired across border at ukrainian troops. pressure is increasing on israel to end its offensive in gaza. president barack obama and the un security council of called for an immediate truce. israel said it will not initiate any attacks, but it will respond to hamas rocket fire. staying on israel, one of the
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biggest backers in the business world is speaking out. media executive haim saban began the power rangers franchise joins us now. he joins us now to what he -- for more and what he had to say. >> when it comes to the business world, he will talk all day about the media. global issues, there is one that he zeroes in on. in our wide whingeing conversation -- ranging conversation, we talked about violence in the middle east and some of the actions by hamas. >> their goal is to demilitarize israel. that is the goal. the world, this time around, as not being fooled. obama, angela merkel, hollande in france, and cameron in england all understand their
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game and are all standing strong by israel. is a longtime political backer of hillary clinton. he reiterated that he would be supporting her if he -- she runs for president, in part because of her stand on subjects like the middle east. >> he is making a big move into the film business. >> he is. he has relaunched its own distributor called saban films. they acquired a film called "the will be inhich theaters in november. they are acquiring four others. their goal is to team up with a large hollywood studio on distribution. did notsked him why he get into the film business sooner, here is what he had to say. >> to the best of my knowledge, this business and that kind of business plan is not one that existed 15-20 years ago.
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>> he is saying that in part because some of these films will be released video-on-demand, some theatrically. we are seeing a lot of this right now on hollywood. >> you are indeed. thiswood, you are watching possible merger between fox and time warner. what did he have to say on that? >> he did weigh in. in the case of a company like time warner, some of the options -- actions they have taken have trimmed down the business. you have other strategies like those at disney. because there are similar shareholder bases for fox and time warner, it will be an interesting one for sure. >> jon erlichman, thank you so much. that is it for today on "in the loop." former secretary of state to president obama talks about rising tensions in the middle east and ukraine. we will be talking to liam dalton about the state of the
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markets and which hedge fund strategies are outperforming this year. ♪
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it is 56 past the hour, bloomberg television is on the markets. i'm olivia sterns. we're 30 minutes into the trading day. let's get you caught up on where stocks are trading. equities, little changed on this and mende monday. &a monday.
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the nasdaq is off by about 15 points. a busy week we are going to have your on the markets. we will get u.s. gdp numbers, it is also fed decision week. writing is job stay. right now, we are also keeping an i on the biotech sector. on the biotech sector. it has outperformed the broader market this year. warning that it may be time to getting out -- to be getting out. thanks for coming. obviously, biotech, huge performance the past 2.5 years. even last wednesday. houma biotech tripled last week. why do you think it is time to shore up the sector? mean to't necessarily get out completely. i do think the risk return profile is changing. as you suggested, it has been a huge outperform her massively over the last 2.5 years.
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you are looking at a very slow driven sector right here. janet yellen made the comment about biotech being overvalued. i don't necessarily agree with that. nonetheless, technical and sector wrote tatian dynamics -- rotation dynamics are very key. a lot of them are starting to register at times. the upside is not as obvious. jittersre to get market , this sector could be very vulnerable. >> a lot of people so you have to treat biotech as its own animal. it is all about the prospect, the hope that you will one day have blockbuster sales numbers and you do not have to look at the margin numbers the same way. >> it has been a heavily flow driven rally. it.dy flows into they are not economically correlated the way most sectors
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are. as they become more flow driven, technical fields our larger. technicals are very important in most sectors. when you are starting to see the demand for the stocks on the upside starting to really fade and that is what i am seeing right now, that is a good signal to be cautious. >> how do you want to play this short? >> as a sector short, i like the iv be implied volatility. >> that is an asset etf? >> yes. it tracks the big biotech stocks. not the big pharma. big biotech stocks. spreads on that are very attractive right now and will make good sites for people who are long. >> you say that, but a lot of the big biotech stocks who have had the biggest runs are some of the most heavily shorted stocks. >> right. been comingst has
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up a lot. a lot of the recent rallies we have seen have been really a function of short squeezes. comeave some good earnings in last week on a couple of the major names. gilead, $3.5 billion. >> exactly. interesting is that in spite of the relatively good earnings for a lot of those key biotech names, the sector is not really going forward. >> all right. michael purves. "market makers" is up next. ♪
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>> live from bloomberg headquarters in new york, this is "market makers." with erik schatzker and stephanie ruhle. >> flying high, the u.s. airlines partly owned by billionaire richard branson is going public. virgin america files for an ipo. up inew york times" goes smoke. it is time for congress to legalize marijuana, it says. the prince of porn. larry flynt talks about his legacy. to "hustler" magazine


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